June 6, 2016
‘Competitiveness Heavily Depends Upon Price’
The Danish fighter jet procurement decision requires further explanation.
By James Hasik
The nine-page summary of the Danish fighter selection report makes for interesting reading. That the MoD’s panel of experts would unanimously rate the F-35 most highly in capability is not shocking. There are plenty of JSF-haters out there, but plenty of air arms that really want that latest-greatest airplane. The panel rated the Typhoon second strategically, figuring that no other air force in Europe is flying the Super Hornet yet, but that there are plenty of nearby allies with Eurofighters. The F-18 came in second in military and industrial respects, but finished second to the F-35 in cost. That seemed more than strange, and upon closer examination, the figures themselves looked downright weird. David Axe of War Is Boring called the whole thing “pretty dumb”. Another blogger described it as a textbook exercise in “how not to choose your fighter”. Reuters and Defense News have already covered the issue too, but I can add some calculations they missed.
There is the minor matter that the Danes used only figures for the slightly more expensive twin-seat F-18F, and not the also-offered single-seat F-18E. Perhaps they figured that the back-seat flight officer helped close the gap in capability, but this isn’t clear in the summary. More detrimentally, the MoD figured the lifespan of a Lightning II to be about 8,000 flight hours, but that of a Super Hornet only 6,000 flight hours. Thus, over a 30-year time horizon, the Royal Danish Air Force would need 38 F-18Fs to fly as many hours as 28 F-35As. Then there’s the matter of procurement cost. The Danish MoD used prices of $122 million per F-18F, and $83 million per F-35A. With these numbers, 38 F-18Fs would cost $4.63 billion, and 28 F-35As just $2.32 billion. But the former figure bears no resemblance to any rumored price of a Super Hornet, ever, and the latter is actually $2 million below even the long-term goal that the US government’s JSF program office has set.
As Defense News dryly noted, Boeing disputes those figures. Wait—why would any company dispute its own figures? Because the figures aren’t Boeing’s. In transnational military sales, some deals—like this one—are government-to-government agreements. So, when the Danish MoD sought information on the Typhoon, it asked the project office in the German MoD, which manages governmental sales within Europe for Eurofighter GmbH. But when it needed information on the two flavors of Amero-fighters, it didn’t have a single point of contact. Figures for F-35As came from the Joint Strike Fighter Joint Program Office, but those for the F-18Fs came from the Navy Department’s Hornet/Super Hornet program office. Those are very different entities, in basically different governmental departments, keeping score on different sheets. According to Boeing, the Navy seems to have baked into the price of the Hornets a lot of prepaid maintenance and training that many overseas customers request, but that the Danes hadn't.
So what if we run the numbers with the prices the US government pays today? Let’s exclude the extra services, but include the engines, which are often left out when discussing JSFs. In the fiscal year 2017 budget, the prices are $92.5 million for each of the two requested F-18s, and $115.9 million per F-35A. With these figures, the totals then would be $3.52 billion for the 38 Super Hornets, and $3.25 billion for the 28 Lightning IIs. Boeing also asserts that the Super Hornet will last not 6,000, but about 9,500 hours—actually longer than a JSF. The lower flight-hour figure is appropriately conservative for the abuse of repeated carrier takeoffs and landings, but Denmark doesn’t have an aircraft carrier. The 2017 numbers might also include some close-out costs, as the Navy’s Super Hornet purchasing winds down; as recently as 2014, the Navy was buying new Super Hornets for about $71 million each.
If the Super Hornet really is a $71 million, 9500-hour fighter, then by the logic of the competition, the Royal Danish Air Force would only need only 24 F-18Fs, and at the prices the US government was getting, the total purchase price of that squadron would be $1.7 billion. On price, that beats 28 F-35s soundly. There are sustainment cost questions too, but no one seriously argues that the stealth fighter will be cheaper to maintain.
But wait again—are 24 F-18Fs worth as much in combat as 28 F-35s? If you’re one of those JSF-haters, you might say so. The experts on Denmark’s Delphic panel, and plenty of others on this side of the Atlantic, do not agree. In that context, it’s unremarkable that the Danes would consider the F-35A more militarily capable than an F-18F. Richard Aboulafia of the Teal Group recently wrote that Russian misbehavior gives Denmark “every reason” to pick the Lightning II over the Typhoon and the Super Hornet, if one values and believes in the long-term efficacy of the stealthiness and the sensor fusion.
All this points to a rotten-in-Copenhagen or Washington conclusion. Either the Danish public procurement process or the American foreign military sales process needs some help. With such scant explanation of the numbers, the cost estimates for both F-18 and F-35 look gundecked. If they’re not, then the Danish government should explain what we’re all missing. If nothing else, tell us whether Boeing (er, the US Navy) actually “bid” $122 million per plane, short of training and maintenance costs. Failing to provide basic information like this impeaches public confidence in the Danish and American defense ministries’ bureaucratic honesty, or just competency.
This is important because sales are pending. For one, Kuwait may finally be able to buy the 24 F-18E/Fs that the Obama Administration has held up. While JSFs are not on offer, that purchase is of importance in the Navy Department; Secretary Ray Mabus has even spoken publicly of his frustration in this matter with the foreign military sales bureaucracy at Defense and State. Why? Because without a shift of money from the Air Force, the carrier decks can’t really get filled with F-35Cs at today’s prices and budgets. Keeping the F-18E/F production line warm offers the Navy a backup in case of crisis. Alternatively, the US Navy’s fallback option could be saved by the RCAF, as Canada may finally soon move on choosing a new fighter jet. That contest will likely come down to F-18 versus F-35, and as Aboulafia told Sydney Greenberg of Breaking Defense, the “competitiveness of the Super Hornet heavily depends upon price.” Knowing what price is really the price really could indeed be a big deal.
James Hasík is a senior fellow at the Brent Scowcroft Center on International Security.